Monday, May 26, 2014

The Investment Game

Who wants to invest money in this stock market?  I know what you're thinking,  "Ed?  Are you seriously going to give investing advice?"

    No, not really.  I'm never giving anyone ANY advice when it comes to investing so don't start calling me E.F. Hutton.  You weren't going to anyway?  Right. I thought so.

    The strategy I've been told works by the wealthy folks I've had the pleasure of meeting, is about compounding interest over time.  It's interesting how things come together.  As you start establishing yourself as a person who's able to wear many hats, you find yourself around like minded people.

    The military is similar because as you advance in rank, you find yourself around veterans who have achieved success in their fields.  Well actually, that's just life.  It doesn't matter which path you choose, right?  As you stick to it and become an expert or authority, you will find others who have pursued a similar path to find similar success.

    The point of this post is to highlight that when you are working for yourself, you have to invest in your own retirement.  You need to be thinking long term.  When I started trucking at 21, retirement was a long way off.  If you started at 21 like me, you're not going to be touching that money for 30, 40, or even 50 years.  That's the beauty of compounding interest and mutual funds.
 
    The earlier you start, the more you'll have when you aren't able to work anymore.  In fact, if you start in your teens, you can put minimal money away every year and by the time you are 30, provided you've picked the right funds and management, you don't ever have to put in another dime.  The money will grow throughout the long time period between when you started and retirement.

    The earlier, the better, when it comes to mutual funds and IRAs.  As an employee, you can contribute to a 401K, and you can also do so as a small business owner.  You can contribute to an IRA, a SEP IRA, an HSA, and a solo 401K, and there are Roth versions of the IRA and the 401K so that you won't pay taxes on the money when you retire.

    The good ole IRS has set up their system to allow you to pick how you set up a retirement plan.  You should tailor your plan to maximize saving money both for yourself and your business.  What most people don't understand is that the IRS wants US citizens to work in this country thereby generating revenue, paying taxes, and both taking and putting back into the system. 

    They don't want to tax you to death, because then people wont support the system.  This system has flaws, and I'm not interested in getting into this here, but for the purpose of this blog, I'll just say that you should know what is taxed, and what is not taxed so that you can navigate the system with some success.

    A good accountant can help you with the taxes, but unless you can afford a financial adviser, you'll be your own financial adviser.  When you're investing in your retirement, it may be that you can't afford not to have a financial adviser, but the important thing is to put something away regardless of how you do it. 

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